Purpose, Structure, and Key Considerations of the Letter of Intent

What is a letter of intent? In simple language, a letter of intent (LOI) is described as “a 3-4 paras long document written in a business letter format that serves the sole purpose of stating your intent to do a particular task, along with outlining the principal conditions of a potential agreement.” A letter is technically drafted with all the broad strokes of a deal, leaving the finer points.

Similar to the memorandum of understanding, it is a valuable item for legal purposes, considering it contains all the aspects of the preliminary commitment made by one group to do business with another group or company hiring the employee. Many letters tend to enlist non-disclosure agreements (NDAs), which urge both parties to keep the deal confidential. Collectively, they decide which details can be made public.

Letter Of Intent For Various Purposes

For Jobs

For job seekers, it is a “personal pitch or professional courtesy,” which is all about introducing themselves and getting the attention of the recruiter while telling them that you are willing to accept this opportunity. To pop up from a swarming market, the best practice is to write it with a hook, attach proof of your achievements, and ask for an interview. Apart from the resume, it helps you showcase more context and information, such as specialized skills. In short, it must clearly explain why you are a good fit for the company.

On the flip side, one can apply for a position that hasn’t been presented yet with this professionally documented letter to kick off a relationship with the company. In certain circumstances, it is renamed a “letter of interest.” 

Note: Generally, a letter of intent shows a higher and more serious level of commitment, while a letter of interest is slightly less formal.

For Business

Companies are frequently involved in huge financial transactions where each legal obligation must be laid out extensively. From announcing new relationships to sealing official purchase agreements, LOI comes as a part of due diligence here before drafting definitive agreements. A rational decision for your safety and asset protection! 

Mainly, it must explain the following in the event of sale & purchase, mergers, and joint ventures:

• The drive behind the doing
• The possible cost
• A clear roadmap for what’s to come 
• The scale of the transaction
• When the company hopes it will occur

To better understand the deal structure, outline every time frame and deal-breakers or binding items. This letter is a reference to keep everything on track in the future. From the subject line to the salutation to the signature, there are certain guidelines to follow. You can browse the Internet for a letter of intent sample.

For Education

Students are seldomly asked to submit the letter of intent alongside other admissions materials to their respective institution. A letter should obviously highlight your intent to enroll in the specific program in the chosen university, educational background, aims to pursue the specific profession, future goals, and examples of what they anticipate to learn. Academically, letters of intent can also be referred to as “statements of purpose.”

How to Write LOI | Letter Of Intent Template

Are you looking to learn how to write LOI? You must check the letter of intent samples available online and write one while keeping the below-mentioned pointers in mind:

• Choose an easy-to-read format and not-too-fancy layout.
• Use business-friendly fonts, such as Arial, Helvetica, Didot, or Cambria.
• Keep line spacing at 1.15 and margins on every side.
• Sell yourself by attaching company-fitting accomplishments and your top few qualifications.
• Always research the company/institute well to understand its core statement.
• Tweak the letter every time for each new position per the JDs and requirements.
• Grab the hiring manager’s attention with a strong first paragraph, or better, FIRST sentence.
• Must include a professional salutation and business-ready closings.
• Don’t make it braggy or boring.
• Mention how the organization will be assisting you to polish your skills.
• End your letter of intent by asking for action.
• Create a professional heading.

Format:

1. Start at the top left with your name, job title, street address, and other contact info like your phone number, email address, and even your LinkedIn handle.
2. Leave a blank line, then the date, and then another blank line. The date is important so the manager knows how fresh your letter of intent is.
3. Add the hiring manager’s name, job title, company name, and street address, too.

What Are The Characteristic Issues Handled In A Letter Of Intent?

• Discretion/Disclosure
• Implicit liabilities
• The framework of the proposed transaction
• A declaration of demands that must be fulfilled
• No shop provisions
• A statement about representations and warranties
• The acquisition price, payment rules, earnouts, a form of compensation, etc.
• Bust-up or breakup fees
• Any charges (fees) if the agreement is not completed due to any cause
• Stating possible conditions for deal termination

Bottomline 

Not always, but generally, it is nonbinding – proceeding to a binding agreement. To further explain…

Whether it is binding or non-binding depends on the way the letter is inscribed – language, tone, vocabulary, etc. In the instance where an agreement comprises vague commitments and is left open for impending negotiation, it may not be considered binding. One can end the confusion by having an attorney review.